Competing With Outsourcing - Corporate executives offer some tips

Outsourcing information technology jobs to companies overseas has gone from being an industry trend to a business tactic that’s here to stay, corporate executives contend. Minority business enterprises can succeed in this new paradigm by specializing in their niche market, some of these executives told attendees at a recent symposium presented by the New York & New Jersey Supplier Development Council Inc. With more U.S. corporations taking advantage of cost-effective production in international markets, opportunities for outsourcing in all industries are raising the bar for MBEs. “There will be about $2 billion going to India through outsourcing contracts. Outsourcing adds greater value of ownership, reduction of cost, assistance to your client’s operation and increases customer satisfaction,” said Sharad Bohra, director of the corporate supply chain for Tyco International.

The symposium, “Global Source: Exploring and Expanding ‘The Inshore Outsourcing Concept,’ ” was the first of the council’s planned series of symposia for MBEs and corporate decision makers. Kevin V. G. Wells, the organization’s general counsel and director of MBE and global services, said the hope is that such interactions will lead to opportunities for council members to grow their businesses.

Proponents of outsourcing say the practice helps companies remain competitive in the global marketplace, holds down consumer prices and ultimately preserves American jobs by keeping companies afloat. Opponents counter that Americans risk being forced out of certain professions by foreign competition, and that reliance on oversees technical talent will undermine American industry’s research and development capabilities. Forrester Research Inc., of Cambridge, Mass., estimates that 830,000 U.S. service jobs will move to low-wage countries such as China, India and Mexico by the end of 2005, up from the 588,000 it predicted in 2003. The firm also estimates that 3.4 million jobs will move offshore by 2015, up from the 3.3 million predicted in 2003.

MBEs venturing into the global market must find ways to rise above the competition from outsourcing and provide services that make them invaluable to their clients, speakers at the symposium stressed. “In order to succeed, [MBEs] must study the business and cultural customs of prospective international clients, read trade publications in their industry, as well as consider partnering with other MBEs to increase product availability and performance,” said Paul Carmody, vice president of information systems at Prudential Financial. Fernando Hernandez, director of supplier diversity group procurement at AT&T, added, “Many of my vendors understand the importance of becoming bicultural and bilingual in a business world. They are the bridge generation. They understand that staying within your boundaries limits your success.”

Although most IT contracts go to India, new pockets of IT outsourcing are sprouting in Eastern Europe and East Asia, where there is a strong push to master English. MBEs will have to fine-tune their services to survive in a market without borders. “Many people will try to be specialists in all services, and that is a bad business concept,” said Lewis Green, national director of supplier diversity for NBC Universal. “With NBC Universal, the majority of outsourcing went to companies that we eventually bought because they did such a great job. When your specialty places you above the rest, opportunities will happen,” he said.